Following Shoprite’s full year results statement, South Africa-based Massmart and Woolworths have announced half year and full year results respectively.
Woolworths’ FY growth driven by food…
Despite highlighting the challenging market backdrop in both South Africa and Australia, Woolworths said group sales rose 16.4% to ZAR72.1 bn (US$5.1 bn). In its home market Woolworths said its performance was boosted by its Food division, where sales rose 11.9%, underpinned by inflation of 6.7% and comparable store growth of 5.7%. By comparison, Clothing and general merchandise sales rose 9.6%, with inflation of 6.2% and comparable store growth of 4.4%.
The retailer said that it had benefited from its comparatively more “resilient” higher-earning customer base, noting that ‘ our mid-to-upper income customers are resilient and our combined group presence continues to present us with opportunities to grow market share and drive profitability in both sub-Saharan Africa and Australasia’.
Looking to the future, Woolworths said that it remained confident around its own strategy, but that market growth was coming under pressure in both South Africa and Australia as they have both become more competitive and increasingly promotional. In the first eight weeks of its 2017 financial year Woolworths noted that food sales had ‘softened slightly, in line with the market’, but that it continued to gain market share.
To see how Woolworths is building a strong presence in grocery retailing in South Africa, see our store visit report for the retailer’s Waterstone flagship.
…As is Massmart’s in H1
Massmart reported sales growth of 8.7% to ZAR42.3 bn (US$3.0 bn), with the disparity between its food-focused divisions and non-food ones underlining how shoppers are keeping a tight control on spending. Its performance was driven by its Masscash, where sales rose 10.3%, and Masswarehouse, sales up 9.2%, offsetting comparatively slower growth at Massdiscounters (sales up 7.6%) and Massbuild (up 5.8%).
Massmart said that the trading environment in South Africa had deteriorated as its first half had progressed with shoppers cutting back on spending on non-essentials. This was underlined, the retailer, said by the difference in growth for its Food and Liquor ranges, where sales rose 13.2%, versus a growth rate of only 3.4% for its General Merchandise and DIY ranges. The importance of its grocery ranges was underlined by the Fresh roll out at the Game fascia, which was in 82 stores by the end of the half. Total sales growth outside South Africa stood at 16.5% at constant exchange rates.